Bain & Company’s “Are You Ready for the Financial Services Opportunities of China’s Greater Bay Area?” report identifies burgeoning financial services opportunities in this region of 70 million people generating US$1.7 trillion in GDP, with Hong Kong’s mature financial services market benefiting from the cross-border opportunity.
“Now is the time for financial services companies to take advantage of the opportunities stemming from the Greater Bay Area, in order to ensure that they are primed to meet the customer demand moving forward,” said Henrik Naujoks, co-author of the report and Bain & Company's Asia Pacific Financial Services Leader, based in Hong Kong.
“It’s clear that customers are interested and see the value in cross-boundary products, so it’s an important time for firms who must start investing in strategic ways to ensure that they are ready to meet the moment.”Henrik Naujoks
Wealth management opportunity
The report finds the greatest immediate opportunity is in wealth management, as today, less than 20% of GBA retail customers own cross-boundary wealth products, yet around 70% of mainland GBA retail customers expect to buy cross-boundary wealth management products in the next three years for those that do not currently own these products.
Life and property-and-casualty insurance also has potential as it is still nascent in mainland GBA cities with penetration at around 6% in 2019, compared to developed markets, where penetration is about twice that rate.
For lenders, increased mobility within the GBA will likely fuel demand for mortgages and lead to additional cross-boundary opportunities, as around 20% of Mainland retail customers and 10% of Hong Kong retail customers would consider getting a mortgage from an institution across the boundary in the next three years.
The report identifies three important mid-long-term actions for financial services companies to implement so they don’t fall behind in capturing this emerging opportunity:
- Differentiate with innovative products and services tailored to the specific needs of GBA customers,
- Create cross-boundary digital and omnichannel experiences that work for a variety of customers,
- Develop an operating model that fosters focus and collaboration for the region to efficiently capturing the new opportunities of the GBA.
Bain research suggests that getting omnichannel right and digital customer experience will be key success factors for capturing these opportunities going forward. It recalled that up to 90% of mainland respondents prefer to research and interact with insurance companies over digital platforms. Some 60% consider digital the best channel for purchasing, monitoring and trading wealth management products.
Priscilla Dell’Orto, Bain & Company partner and a co-author of the report suggested that the customer should be top of mind when looking to tap the opportunity that GBA is presenting.
“Connectivity is the name of the game here and firms should be looking at investing to perfect their omnichannel experience, marketing and digital solutions as customers expect an innovative, connected and seamless experience or else they will sign up with someone else,” she added.
Cross-boundary wealth management connect and insurance service centres are among some of the key GBA initiatives under active discussion and may come soon. “While the GBA continues to evolve, uncertainty remains about the pace and scope of future regulatory and policy changes” said Herbert Lee, Bain & Company associate partner and co-author of the report.
“The momentum and customer demand are clear - as is the fact that this is an important moment for the region’s financial services ecosystem.”Herbert Lee